Is Offshore-Offshore Banking a scam and illegal?

Is offshore-offshore banking a scam, or even illegal? Stefan Neuss, founder of WERA Capital Partners, hears this question often. To answer it, he looks back at the history of offshore finance.

From the 1950s onwards, the City of London helped build a network of financial centres in British overseas territories, including the Cayman Islands, the British Virgin Islands, Bermuda, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands and, at the time, Hong Kong. Companies and trusts could be formed there and bank accounts opened locally. This was legal and, for decades, very successful.

The first major change came in 1997, when Hong Kong, the largest of these hubs, was returned to China. The second came in 2016 with the Panama Papers. After the leak, the traditional offshore centres came under heavy pressure to give up banking secrecy.

Offshore companies and trusts still exist today. But, Neuss explains, as soon as their owners bank with local institutions, transaction data is shared with central banks and other authorities.

According to Neuss, offshore-offshore banking developed as a response. A small group of very wealthy people looked for legal ways to regain banking privacy. He describes it as one of the best-kept secrets of the banking industry: elite banking, by invitation only, for qualified clients.

Privacy is also the reason why so little can be found about it online. "The elites know how to keep things private," Neuss says. The absence of Google reviews, he argues, is not a warning sign but a feature of the market.

Neuss's answer to the question is clear: offshore-offshore banking is neither a scam nor illegal in itself. As with any international structure, clients must still meet the tax and reporting rules of their home countries. It is aimed at owners of seven, eight and nine-figure businesses and at large crypto investors. WERA Capital Partners checks in a 1h private consultation over zoom whether a client qualifies.